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ConocoPhillips will split refining and exploration/production August 2, 2011

Posted by mytruthaboutoil in Oil (general), Oil giants.
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ConocoPhillips, the $226 billion Houston-based oil giant, yesterday said that it will spin off its refining and marketing operation, in a move aimed at creating more value as two separate publicly-traded companies.

The announcement sent the stock pf the third largest oil firm in the US up by 6.43 per cent to $79.18 in morning trading on the New York Stock Exchange. ConocoPhillips plans to separate its oil refining and marketing business from its exploration and production operations.

The split would create two publicly-traded companies, one focused on finding and extracting oil and gas around the world, and the other on converting the crude into refined products such as gasoline that could be sold to consumers.

It is the first oil major to shift from the decades-old industry strategy of consolidating production and refining, though in May 2011 the much smaller Marathon Oil decided to spin off its refining business by forming Marathon Petroleum Corp, a stand-alone company.

ConocoPhillips will become the largest refining company in the US based on capacity and the largest exploration and production company based on oil and gas reserves

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Schlumberger goes up despite desappointing results April 21, 2011

Posted by mytruthaboutoil in Oil (general), Oil giants, Oil trading.
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Schlumberger Ltd (SLB.N), the world’s largest oilfield services company, posted a lower-than-expected quarterly profit on Thursday, but said customer demand would rise, sending its share price up.

Oil prices have climbed above $110 a barrel, prompting producers, including Saudi Arabia, to ramp up spending on new fields to increase their output capacity and make up for supplies that have been cut off from Libya.

“The absence of Libyan production worries the oil producers. They do not like too high… oil prices because of the potential it has to destroy demand,” said Chief Executive Andrew Gould. “I think that I’m much more confident that the international stream is going to come back faster.”

Still, Schlumberger’s first-quarter operations were hurt by the unrest in energy-rich countries Egypt, Tunisia and Libya.

Flooding in Australia and poor weather in North America also dampened its business, but Gould said the energy industry was spending heavily to make up for Libya and higher demand for gas and fuel oil in Japan.

One analyst said the company’s profit margins remained healthy compared to its peers.

“They’ve essentially caught up to Halliburton in North American margin performance,” said Kurt Hallead, an analyst with RBC Capital Markets in Austin, Texas.

Halliburton (HAL.N), the global No. 2 in oilfield services and market leader in North America, topped market expectations on Monday, with its first-quarter earnings [ID:nN15257560] boosted by its business in the United States.

Schlumberger’s first-quarter profit rose to $944 million, or 69 cents per share, from $672 million, or 56 cents per share, a year earlier.

Excluding one-time items, Schlumberger earned 71 cents per share, compared with the 76 cents that analysts expected, according to the average on Thomson Reuters I/B/E/S.

Schlumberger warned late last month that turmoil would knock 8 to 10 cents per share off its first-quarter earnings. [ID:nN28176824].

Revenue rose 56 percent to $8.72 billion, slightly below the average analyst forecast of $8.82 billion.

Earlier on Thursday, Weatherford International Ltd (WFT.N), the world’s fourth-largest oilfield services company, reported a first-quarter profit compared with a loss a year earlier, helped by higher revenue in the company’s North America segment. [ID:nL3E7FL0FX]

Schlumberger’s shares rose 1.4 percent to $89.09 per share on the New York Stock Exchange, bringing its gain so far this year to nearly 7 percent

Commodity traders make final stand March 30, 2011

Posted by mytruthaboutoil in Oil giants, Oil prices, Oil trading.
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A global push to damp down wild swings in oil and other commodity prices reached a pivotal point Monday as big traders mounted their last attack on a U.S. plan to limit the role of speculators.

Many of the world’s biggest commodity market participants such as U.S. agribusiness giant Cargill Inc are resisting new rules that would cap how many futures and related swaps contracts any one company can control.

The plan to impose “position limits”, which has been under debate since prices first surged to records in 2007 and 2008, is now reaching its culmination, with companies rushing to submit their views to the U.S. Commodity Futures Trading Commission by Monday’s deadline.

So far, most are reframing familiar complaints: Banks, traders and exchanges opposing the CFTC plan say it would make it harder for them to hedge risk, and that it would reduce liquidity and increase costs for consumers. If the proposed rules are adopted with no change, “there is a substantial risk that they would undermine the efficiency of the markets for hedgers, by reducing liquidity and disrupting markets which currently function well”, Linda Cutler, a Cargill vice president, said in a letter to the agency.

But at a time when oil, grain and metal prices have again shot up, some reaching new heights, consumers too are looking for some regulatory relief. Politicians are stepping up pressure for action.

“The banks think this rule is too strong. Commercial end users, consumers, unions … think it’s far too weak,” Michael Greenberger, a University of Maryland law professor and former senior CFTC staffer, told Reuters Insider.
“As the American public starts suffering from $4 a gallon gasoline … the issue becomes more visible, the debate between the consumer and the big banks is more highlighted,” he said.

From Chicago and New York to London and Paris, the commodities markets influence prices for energy, metals, food and other products that hit consumers in areas such as the gas pump and the kitchen table, and so are politically volatile.

The CFTC polices the markets and is under orders from Congress to address perceptions that speculators periodically drive sharp swings in commodity prices that hurt consumers and producers. The CFTC plan would apply to exchange-traded futures and related over-the-counter swaps in 28 energy, metals and agricultural markets.

A 60-day period for public comment on it ends Monday. The CFTC must next read the comments and decide whether to change the proposal. Its five commissioners must then vote. Support for the plan is uncertain within the CFTC. The agency’s chairman, Gary Gensler, may have trouble mustering the three votes needed to finalize it. A final vote may not come for some time.

The “position limits” fight comes as regulators worldwide are working to draw up and implement hundreds of new rules for banks and markets following the 2007-2009 financial crisis, which unleashed a wave of reform efforts.

France favors a crackdown on commodity market speculation in its role as 2011 chair of the Group of 20 major economies. French officials blame speculation for worsening a surge in food prices last year amid fears that such swings fuel political unrest, particularly in the developing world.

“While the Europeans, and particularly the French, share CFTC Chairman Gensler’s concern about commodity prices, there is some skepticism among EU regulators that hard position limits are the right answer,” said Joseph Engelhard, a policy analyst at advisory firm Capital Alpha Partners. “The U.S. hard position limit approach leaves open the possibility that the regulators might overshoot their target levels and actually increase volatility.”

Although it is meant primarily to limit holdings by the funds and investors who have diversified into commodities over the past decade, the CFTC’s plan threatens business models that have generated profits for years for some of the financial world’s biggest players.

The market leaders include firms such as Goldman Sachs and JP Morgan Chase & Co. U.S. banks took in $5.5 billion in revenues trading in commodity markets last year, versus a record $11 billion in 2009, the U.S. Office of the Comptroller of the Currency said.

The 2010 figures represented just under 10 percent of the industry’s trading revenues. The decline from 2009 was due largely to decreased volatility and reduced hedging, officials have said, but also reflected less risk-taking by the banks.

Traders argue there is no evidence that speculators inflate prices, and say curbs could make prices more volatile. The CFTC’s economists have not found a causal link between speculation and price volatility, with one study showing commodity index traders are not causing price volatility, but may actually be helping to reduce it.

The agency’s effort was mandated by Congress in the Dodd-Frank financial regulation reforms made law in July 2010. But as in many other parts of that sprawling legislation, Congress left it up to regulators to hammer out the details.

“We challenge the fundamental premise upon which the CFTC argues that it has authority to impose position limits under Dodd-Frank,” said the International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association, both industry groups, in a letter to the CFTC. “The proposed rules do not set forth why the proposed limits are necessary or appropriate.”

Earlier this month, Democratic Senator Maria Cantwell urged the CFTC to crack down on oil speculation that she said was likely contributing to recent gas price spikes. In a letter to Gensler, Cantwell and 11 other senators urged him to use his Dodd-Frank authority against “excessive speculation”.

“While oil speculators on Wall Street may be profiting from Middle East turmoil … families and businesses on Main Street are footing the bill at the gas pump,” Cantwell said in a statement on Friday.

Is Shale gas the new black… gold? February 1, 2011

Posted by mytruthaboutoil in Geostrategy, Oil prices.
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For a few months now, energy analysts and traders have observed the emergence of a true game changer. Shale gas is to become big… really big in the coming years.

Over the past decade, a wave of drilling around the world has uncovered giant supplies of natural gas in shale rock. By some estimates, there’s 1,000 trillion cubic feet recoverable in North America alone—enough to supply the nation’s natural-gas needs for the next 45 years. Europe may have nearly 200 trillion cubic feet of its own.

We’ve always known the potential of shale; we just didn’t have the technology to get to it at a low enough cost. Now new techniques have driven down the price tag—and set the stage for shale gas to become what will be the game-changing resource of the decade.

I have been studying the energy markets for 30 years, and I am convinced that shale gas will revolutionize the industry—and change the world—in the coming decades. It will prevent the rise of any new cartels. It will alter geopolitics. And it will slow the transition to renewable energy.

To understand why, you have to consider that even before the shale discoveries, natural gas was destined to play a big role in our future. As environmental concerns have grown, nations have leaned more heavily on the fuel, which gives off just half the carbon dioxide of coal. But the rise of gas power seemed likely to doom the world’s consumers to a repeat of OPEC, with gas producers like Russia, Iran and Venezuela coming together in a cartel and dictating terms to the rest of the world.

The advent of abundant, low-cost gas will throw all that out the window—so long as the recent drilling catastrophe doesn’t curtail offshore oil and gas activity and push up the price of oil and eventually other forms of energy. Not only will the shale discoveries prevent a cartel from forming, but the petro-states will lose lots of the muscle they now have in world affairs, as customers over time cut them loose and turn to cheap fuel produced closer to home.

The shale boom also is likely to upend the economics of renewable energy. It may be a lot harder to persuade people to adopt green power that needs heavy subsidies when there’s a cheap, plentiful fuel out there that’s a lot cleaner than coal, even if gas isn’t as politically popular as wind or solar.

But that’s not the end of the story: I also believe this offers a tremendous new longer-term opportunity for alternative fuels. Since there’s no longer an urgent need to make them competitive immediately through subsidies, since we can use natural gas now, we can pour that money into R&D—so renewables will be ready to compete without lots of help when shale supplies run low, decades from now.

To be sure, plenty of people (including Russian Prime Minister Vladimir Putin and many Wall Street energy analysts) aren’t convinced that shale gas has the potential to be such a game changer. Their arguments revolve around two main points: that shale-gas exploration is too expensive and that it carries environmental risks.

I’d argue they are wrong on both counts.

Take costs first. Over the past decade, new techniques have been developed that drastically cut the price tag of production. The Haynesville shale, which extends from Texas into Louisiana, is seeing costs as low as $3 per million British thermal units, down from $5 or more in the Barnett shale in the 1990s. And more cost-cutting developments are likely on the way as major oil companies get into the game. If they need to do shale for $2, I am willing to bet they can, in the next five years.

When it comes to environmental risks, critics do have a point: They say drilling for shale gas runs a risk to ground water, even though shale is generally found thousands of feet below the water table. If a well casing fails, they argue, drilling fluids can seep into aquifers.

They’re overplaying the danger of such a failure. For drilling on land, where most shale-gas deposits are, the casings have been around for decades with a good track record. But water pollution can occur if drilling fluids are disposed of improperly. So, regulations and enforcement must be tightened to ensure safety. More rules will raise costs—but, given the abundance of supply, producers can likely absorb the hit. Already, some are moving to nontoxic drilling fluids, even without imposed bans.

A drunk trader scares the world… and loses $520 million June 30, 2010

Posted by mytruthaboutoil in Oil trading.
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It is not uncommon for financial traders to wonder how they burnt so much cash during a drunken night on the town. But Steve Perkins was left with a bigger black hole when his employer rang one morning to ask what he had done with $US520 million of the oil trading firm’s money. At 7.45am on June 30 last year the broker for PVM Oil Futures was contacted by an administration clerk asking why he had bought 7 million barrels of crude in the middle of the night.

By 10am it emerged that Mr Perkins, 34, had single-handedly moved the global price of oil to an eight-month high during a drunken blackout. Prices leapt by more than $US1.50 a barrel in under half an hour at around 2am, the kind of swing caused by events of geopolitical significance.

By the time PVM realised the trades were not authorised and swiftly began to unwind the positions, losses of exactly $US9,763,252 had stacked up.

Details of the bizarre incident have only just been made public after a British Financial Services Authority investigation.

According to the regulator, Mr Perkins first started trading irregularly the day before the enormous price spike. He had been drinking heavily over the weekend at a PVM golf event.

Records show that he placed a legitimate order for a client at 1.34pm. This was quickly followed by seven more orders with a value of $US8 million using PVM’s cash.

In the early hours of the morning, he returned to the oil market via his laptop. He placed an incredible $US520 million in orders through ICE Futures Europe. The first trade, at 1.22am, was at $US71.40 a barrel and the last trade at 3.41am was at $73.05. During this period, he gradually edged up the price by bidding higher each time, until he was responsible for 69 per cent of the global market volume.

By 6.30am, he appeared to have realised what he had done. He sent a text message to the managing director claiming an unwell relative meant he would not be coming in to work. When PVM challenged his story, he confessed and co-operated with the inquiry. He told investigators he has ”limited recollection” of the entire episode, claiming he had placed the trades during a drink-induced stupor.

Mr Perkins was banned from trading for five years and fined £72,000 ($127,000), reduced from £150,000 because of potential financial hardship.

The truth about the oil business November 21, 2008

Posted by mytruthaboutoil in Geostrategy, Oil (general), Oil prices, Oil trading.
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Hi everyone,

Welcome to the fascinating world of black gold. Let me introduce you to this blog. As often as I’ll be able to update this site, I’ll take you for a little trip behind the oil and natural resources businesses scene.

 I’ll try in my posts to go a little further than the unpredictable (even for me) daily fluctuations of the barrel. I started to think about writing this blog few months ago. Prices were frenetically rising and it seemed that suddenly people realized that oil was not only fuelling their cars, but also the whole economy, and that the price of oil was making a real difference into their lives. These days are gone (for the moment at least) and the financial tsunami has washed up the oil bubble, but the interest remains and more and more people just want to know what is going on. I do not say that reading this blog will enable you to understand how the world turns, but you might find here small tips to get a better vision of the impact of oil in today’s world. Have a nice time reading my posts. Do not hesitate to post comments or suggestions. PS: forgive my (sometimes) poor english. Maybe I’ ’ll be able to update this site, I’ll take you for a little trip behind the oil and natural resources businesses scene. I’ll try in my posts to go a little further than the unpredictable (even for me) daily fluctuations of the barrel.s world situation.ll write in german and/or french sometime